There’s a lot to consider when selling farmland
There’s a lot to consider when weighing a decision on selling farmland. It’s a decision that should never be rushed or reached without careful research, proper partnerships and sound advice.
Because there are always many different factors to each and every land owner’s reason for putting part or all of a farm up for sale, deciding what’s best when selling land can be difficult. It takes a lot of work and knowledge to not only be sure the decision to list land is correct, but also to be sure the seller is going to get what they need out of the eventual sale.
With that in mind, here are X factors that need to be kept in mind when you are looking into listing farmland is the right move for you.
1. Land is in high demand
There is a lot of demand on the buyer end for high-quality agricultural land. This puts potential sellers at a potential advantage.
Why is land in high-demand? Well, for one, there is simply less land for sale in most areas than normal. But that doesn’ mean there are fewer buyers out there.
In fact, there is arguably more interest in most rural areas for good farmland. It’s just a simple fact that there isn’t enough land on the market.
2. Land values are in good shape
All that pent up buyer interest has only done positive things for land values. Prices for good, quality land that has a track record of performing well can fetch a good price on the real estate market.
Land is also widely recognized as a worthy long-term investment, another reason why land prices are holding up. According to Farm Progress, this is due to the expected increase in demand for food production thanks to the global population’s continued growth.
Without going too deep here, food production is going to be needed more than ever. Therefore, land is expected to retain its value over the long run.
3. Check the local prices
Before you decide to list land for sale, you should know how land is performing in your region. Not all regions are faring the same way as far as farmland is concerned.
Find a local farm real estate services provider to work with whom you can trust to give you the information you need, including land sale prices that are comparable to the property you are looking to sell.
4. Have you done your research?
Let’s not get too ahead ourselves before covering one of the most important factors: research. This is so much more than knowing local comparable prices, too.
For example, sellers need to have a lot of information on hand or prepared before they can take the steps necessary to legally sell farmland. Information needed will include who exactly is listed as the land owner (this could be multiple people).
But you will also need to have your bases covered for any tax implications that may apply with the land sale. Again, this is where a farm real estate professional is helpful. The pro you choose to work with should be knowledgeable about tax issues.
In addition, you will want to think like a buyer regarding your land. Ask yourself what type of information a buyer would likely need to know about your land and work ahead to get those answers before the process really gets rolling.
Having all this information at the ready will go a long way in keeping the eventual sale on schedule and with as little complication as possible.
5. Prepare to perform maintenance
Selling farmland is not unlike selling a home in that you should always be prepared to put in some work and perform necessary maintenance that will help a sale go through smoothly.
Make necessary repairs to fences, buildings and any other property features that could use some care.
A little bit of work ahead of time could provide an even better final sale price.
6. Avoid common complications
Every sale in real estate, agriculture or otherwise, can run into complications. That’s why it’s critical to try and get in front of complications that may be avoidable.
Two of those complications that sellers can settle, according to Farm Progress, are boundary surveys and easements.
Boundary surveys are sometimes requested by buyers so they can see for themselves there are any possession claims. A possession claim could occur when property that a legal description of the property says is the sellers, but someone else has been on the property for enough years that it’s actually their property.
This happens more often than you might think in farming. A boundary survey proves there will be no disputes and could help a sale go through more easily.
You may also need to clarify whether easements are necessary, especially if you are retaining some land in the sale. An easement will ensure the buyer has access to their land.
7. Consider renting your land
If you haven’t yet thought about what it would look like to rent land, maybe start a discussion with a trusted advisor about the matter before jumping right into the selling process.
Many farmland owners in the U.S. rent land to tenant farmers – 40%, in fact. This makes for a sound investment strategy and can even generate income.
In addition, farmland is a more sound investment strategy than many other options, including stocks. According to Tillable, farmland historically has performed better than the S&P 500, Nasdaq, gold, real estate and timber.
It’s also a way to make sure land stays in the family. Sentimental value is not something to be discounted throughout this decision-making process.
With these additional factors in mind, maybe it’s time to talk to a farm management provider to seek solutions that pay off year after year.
Make Midwest Land Management your go-to for farm real estate needs
Whether you are wanting to sell or buy land, Midwest Land Management is ready to put our team to work for you.
Midwest Land Management specializes in northwest Iowa farm real estate sales through both public auctions and private listings.
Interested in selling land? Give us a call today and we’ll make sure our experienced, proven team delivers the results you are looking for.